Spotify hit with €1.3bn lawsuit over claims of 'unpaid royalties'

Music streaming giant Spotify has been hit with a US$1.6bn (€1.33bn) lawsuit for hosting songs which it allegedly does not have full rights to.

Wixen Music Publishing claims the Sweden-based company has failed to compensate musicians, songwriters and publishers for songs which include Tom Petty's Free Fallin and The Doors' Light My Fire.

"Spotify brazenly disregards United States Copyright law and has committed wilful, ongoing copyright infringement," Wixen said in the complaint.

"As a result Spotify has built a billion dollar business on the backs of songwriters and publishers whose music Spotify is using, in many cases without obtaining and paying for the necessary licenses."

It also suggests more than 20% of songs available on Spotify are unlicensed and illegal.

Spotify has not responded to a request for comment.

The California-based company administers songs by artists such as Janis Joplin, The Black Keys' Dan Auerbach, Neil Young, Stevie Nicks and Rage Against The Machine.

Spotify has been dealing with another copyright lawsuit brought by a group of songwriters and publishers including Wixen.

The streaming company tried to settle the lawsuit by compensating the plaintiffs with €36m, which Wixen rejected and is now pursuing a suit of its own.

"The Settlement Agreement is procedurally and substantively unfair to Settlement Class Members because it prevents meaningful participation by rights holders and offers them an unfair dollar amount in light of Spotify's ongoing, wilful copyright infringement of their works," Wixen said.

The lawsuit could derail Spotify's plans to go public and list shares on the New York Stock Exchange.